Bronchopulmonary Dysplasia, (BPD) is a significant health problem, accounting for $4 Billion in annual health care costs. This is second only to asthma in child health care costs. A major gap in understanding the pathogenesis of BPD is knowledge of interacting signals regulating the development of the alveolar unit (defined here as the alveolar epithelium and the underlying microvascular bed), and how these interacting signals are disrupted by hyperoxia. Our long term goal is to develop an understanding of the mechanisms of disrupted development of the alveolar unit in BPD. Our main objective is to develop mechanistic insight into normal and oxygen-injured development of the alveolar unit through study of angiostatic, using a candidate molecule approach. Our primary candidates are Pigment Epithelium Derived Factor (PEDF), and its upstream regulator Kringle 5 (K5). The processes of microvascularization and alveolarization are closely connected. Angiogenesis is closely regulated by a balance between pro- and anti-angiogenic signaling. Disruption of this balance by hyperoxia could cause abnormal development of alveolar units. We demonstrated that neonatal hyperoxic lung injury is associated with increased PEDF, particularly in alveolar crests, type II cells, and endothelial cells, while vascular endothelial growth factor (VEGF) is decreased. We will study the effect of PEDF induction or inhibition in vivo and in vitro on alveolarization and microvascularization, and study the mechanisms by which it inhibits angiogenesis. We hypothesize that hyperoxic injury in the neonatal lung disrupts the normal balance of angiogenic and angiostatic signaling, causing impaired microvascular development needed for proper alveolarization. We propose to study inhibition by PEDF of alveolarization and angiogenesis in neonatal mouse lungs and mouse lung endothelial cells. We will determine the mechanisms by which PEDF downregulates VEGF production and activity, and by which PEDF exerts its action. Finally, we will look upstream of PEDF at proximal angiostatins, particularly Kringle 5. Kringle 5 is produced by matrix metalloproteinase 9 (MMP-9) action, which we showed is significantly upregulated in neonatal lung oxygen injury and arrests alveologenesis. We will determine if angiostatic effects in hyperoxia are driven by a MMP-9 - K5 - PEDF pathway. These studies are innovative since they develop a new direction for studying mechanisms altering development of the alveolar unit in BPD. The impact of this proposal will be the development of a novel mechanistic pathway for BPD which could lead to new therapeutic strategies.